Definition
- Availability of substitutes
- Availability of substitutes is how easily buyers can switch to a similar good; the closer and more plentiful the substitutes, the more elastic the demand.
Example
Can you think of an example of availability of substitutes?
One brand of crisps rises 10 per cent in price and its sales fall 30 per cent, an elasticity of 3, because another brand sits on the same shelf.
Test yourself
Can you name the four determinants of price elasticity of demand?